Boswell launches new attack on Village

Page Tools

Village Roadshow has again come under attack from one of its smallest but most aggravating shareholders after German investor Boswell Filmgesellschaft lodged a complaint with the securities watchdog about Village's ordinary share buyback.

The Australian Securities and Investments Commission is thought to be looking at Boswell's charge that there are uncertainties surrounding the film and entertainment group's balance sheet and therefore it should not be spending money on share buybacks.

Threats from Boswell about a challenge to the buyback of up to 10 per cent of Village's ordinary shares are believed to have prompted the company to issue a profit guidance on Thursday to reassure investors it will post a full-year net profit of about $52 million.

However, Village has yet to reinstate dividend payments on ordinary or preference shares.

Village managing director Graham Burke said on Friday it seemed strange that someone with only 2000 shares was "spending a fortune on legal fees and claim they have no association with any other shareholding".

AdvertisementAdvertisement

"I am sure the Australian authorities will see them for what they are," Mr Burke said.

ASIC declined to comment.

Boswell's complaint centres on section 257A of the Corporations Act, which stipulates "a company may buy back its own shares if: (a) the buyback does not materially prejudice the company's ability to pay its creditors; and (b) the company follows the procedures laid down in this division".

It is believed Boswell has also complained that Mr Burke and Village co-chairmen Robert and John Kirby last month launched the buyback to tighten their grip on the company. The three jointly own 50.3 per cent of the ordinary shares. If they don't participate in the buyback their stake will rise to about 56 per cent at no cost to themselves.

The buyback, worth $43 million, will be financed by debt and comes on top of the $170 million the company has spent in recent months buying back 56 per cent of its non-voting preference shares.

Village bought back the non-voting preference shares on market after it failed last year to get shareholder approval to buy back all the non-voting stock for $360 million over three years.

That scheme was derailed by Boswell, which owns only 2000 Village shares, by a court challenge.

Boswell argued in court that Village had misinformed shareholders about their voting rights because holders of ordinary shares who also held preference stock were excluded from voting on the buyback.